Retail Theft in California- A Special Report by the Hoover Commission

Below is an excerpt of the full Commission report. You can read the full report here.

In June 2023, 66 members of California’s legislature asked the Little Hoover Commission to examine retail theft. The report responds to that request.

“For many Californians, the evidence of retail theft is plain to see. Videos on social media and in news reports show brazen thefts of property, sometimes by large or violent gangs. Retailers say that they rarely call law enforcement when theft occurs, and some law enforcement officials say there are few consequences even if citations are issued. Businesses are locking up more items on their shelves. Public officials have taken notice. Governor Gavin Newsom awarded $267 million in extra funding to local law enforcement to combat organized retail theft. The Legislature created a new committee to address the issue, and a variety of bills were introduced” and are now making their way through the legislature. And, major retail chains like Target and Walmart bank rolled enough signatures to get Prop 36 placed on the November ballot. Local leaders such as San Francisco Mayor London Breed announced crackdowns and her support for Prop 36.

As reported in the Sacramento Bee, “Proposition 36, criminal penalties: This measure would revise Prop. 47, a 2014 ballot initiative that downsized some lower-level crimes to misdemeanors and put in place a $950 threshold for shoplifting felonies. The ballot measure’s backers, which include San Francisco Mayor London Breed and the California District Attorneys Association, argue Prop. 47 has led to increased crime and retail theft. The proposed changes would raise penalties and sentences for some drug and theft offenses. For example, fentanyl would be added to the list of drugs that warrant a felony charge if the person also possesses a gun, increasing the punishment from up to one year in jail to up to four years in prison. Another major revision would hike up punishments for convicted shoplifters with two or more prior theft-related convictions. Gov. Newsom and other Democratic leaders in the legislature are opposed to Prop. 36. They have floated their own 14-bill package to reduce retail theft instead.”

“Reports of retail theft increased in 2022, but remain far below reported levels of the 1970s, 80s and 90s. Different regions of the state reflect different experiences of retail crime – some increasing, others decreasing. The rate of “shrink” – the term used by the retail industry to refer to theft and other inventory losses – shows a modest increase. Perhaps most important, the rate of under-reporting of theft to law enforcement, a crucial issue, is hotly debated. Retailers and some law enforcement officials suggest a substantial amount of under-reporting; scholars who study data about retail theft say it is difficult to assess the level of under-reporting with any degree of certainty. All of these factors have contributed to an increased degree of public fear and concern about theft, yet these issues also point to a need for more and better data.”

Underreporting is not helping the data either. “Not all retail theft is reported, but by its nature underreporting is extremely difficult to measure. Little data is available. A federal study of the reporting of household and personal property crimes shows a moderate downward trend in the rate of reporting since 2010.” And, when major retailers do make reports, they can be penalized for it as in the case of Target store in Sacramento recently. As Ishani Desai reports in the Sacramento Bee, “The Sacramento City Attorney’s Office warned a chain retail store that it could face a public nuisance charge due to a large number of phone calls placed to police when thieves repeatedly stole from its Land Park location. A person with knowledge of the warning, but not authorized to speak publicly due to the fear of retaliation, told The Sacramento Bee that city officials threatened the Target at 2505 Riverside Blvd. in the past year with an administrative fine. A Sacramento police spokesman confirmed the location — a site that prompted heavy ire from Land Park residents due to repeated crimes — when asked about the apparent warning.”

“Any increase in retail theft has real-world impacts on businesses, consumers and others, and it is important to understand the concrete effect of this form of crime. Retail theft’s most direct consequences are the losses experienced by businesses. Some businesses have cited theft as a reason for closing stores. Mom- and-pop businesses, often operating on razor-thin margins, have a smaller safety net than national retailers to recover from these losses. In addition to the immediate monetary losses, there are indirect costs associated with retail theft, such as enhanced security measures and an increase in insurance premiums. In extreme cases, these cumulative expenses can result in business closures, subsequently affecting local employment. The effects aren’t limited to businesses. Losses due to theft are often recuperated through higher prices. This can be particularly challenging for economically vulnerable populations. Furthermore, frequent incidents of theft can lead to an unpleasant shopping experience, characterized by a visible security presence, locking items away from customers, and other measures resulting in a perceived decline in customer service. This, in turn, can lead consumers to shop elsewhere, further harming the store’s bottom line.”

The Hoover Commission report makes recommendations. Below is Recommendation #2 which is fully supported by NBLC.

Recommendation 2: To better understand the complexities involved in the causes and effects of retail crime and to develop evidence-based solutions, the State of California should fund studies on the following topics. This research should be conducted by the University of California, the California State University, the California Community Colleges, independent universities, or other nonpartisan research institutions.

1. Retail theft preventative measures and effectiveness. This should include information on the types and effectiveness of retail theft prevention programs, policies, and technologies.
2. Underreporting of retail theft. By examining the frequency of underreporting and the degree to which underreporting changes over time, this study could resolve the most important gap in current data about retail theft.
3. Economic impact of retail theft. This should include direct and indirect costs to businesses, insurance companies and premium taxpayers, the community, and local and state government.
4. Causes of public perception of retail theft. In addition to understanding what the public’s perception of retail theft is, this study should investigate why the public believes what it does.
5. Fencing of stolen goods. This study should look at how and where stolen goods are disseminated to consumers and who is purchasing them.